SECTOR INFORMATION
THAILAND
1995
(Sample Information)
Brief profiles on the following sectors are included on the basis of information prepared by the Board of Investment of Thailand:
For further information please contact:
Office of the Board of Investment
Office of the Prime Minister
555 Vipavadee-Rangsit Road
Chatuchak, Bangkok 10900, Thailand
Tel: (662) 537 8150, 537-8155
Fax: (662) 537-8177
Agricultural Machinery
Status of the Industry
From heavy reliance on the production and export of primary agricultural products the industry has diversified to meet changing consumer tastes and export markets. The result is much greater use of farm machinery and a market now valued at US$ 360 million a year.
A number of other changes account for the greater importance of machinery in Thai agriculture. As land resources have become scarcer and labor more expensive with the migration of large numbers of young people to urban areas, farmers have had to turn to modern agricultural machines to maintain or increase production.
Starting with the production of nonmechanical animal-drawn carts, local manufacturers have developed the capability of supplying new types of powerintensive machines such as twowheeled tractors (power tillers), threshers, agricultural sprayers, and water pumps. These are now produced on a relatively large scale along with other machines such as farm trucks. And some companies have now taken up the manufacturing of more advanced, controlintensive machines.
Though local manufacturing capability is increasing, a significant proportion of farm machinery (3040 percent) is imported. one reason is that local manufacturers cannot make the more advanced machines. Another reason is that current import tariff structure favors completely builtup machines (CBUs) over locally made or assembled machines. As a result, there is a good market in Thailand for importing secondhand agricultural machinery.
Annual Demand Figures on Agricultural Machines
Machine type 1990 1993 1996p
Power tiller 103,362 138,810 174,371
Water pumps 162,690 207,156 265,072
Machine sprayers 703,961 1,003,227 1,316,586
Threshers 3,238 1,957 1,859
Four wheel tractors* 7,819 10,796 13,455
Farm trucks (e) 4,500 5,150 3,900
Diesel engines 130,000 175,000 228,000
Note: * including all sizes and imported second hand tractors
Sources. AED, OAE, e estimated, p projected by SEAMlCO BIR
There are 60 medium to largescale manufacturers employing from 30 to more than 1,000 workers. There are 15 major manufacturers of power tillers and three major manufacturers of diesel engines. Overall, competition is low because most sectors of the industry are still growing and the market expanding. There is little product differentiation from one manufacturer to another and so there is little brand loyalty. Competition tends to be in terms of service, promotion, and distribution.
Most imported agricultural machines are small fourwheeled tractors with 6070 percent of customers being individual farmers. Other customers comprise mainly custom contractors and foodprocessing companies.
The largest product segment consists of small diesel engines, power tillers, and sprayers. These market segments are expected to grow by 30, 8, and 9 percent, respectively, during the next few years. Overall, expectations are that the industry as a whole will grow at an annual rate of 7.5 to 9 percent for the next several years. This means that by the end of 1996 the agricultural machinery industry will be valued at US$ 520 million.
Some problems
Local sourcing of raw materials and parts and components is limited because of poor quality and unreliable delivery. Key local metalworking and machinetooling industries, however, receive strong government support and expectations are that local sourcing will be much improved in the near future.
Local manufacturers also face other constraints, such as:
In spite of some production and marketing constraints, it is clear that the agricultural machinery industry in Thailand will continue to diversify and expand at least until the end of this decade. It is also clear that constraints can be overcome by better technology, a more skilled work force, innovative products that better meet market demands, and sound management and marketing.
Investment Opportunities
The most attractive investment opportunities are for:
More specifically, successful investment will depend on
Contact persons/ addresses
Agricultural Engineering Division
Department of Agriculture
Bangken
Bangkok 10900
Tel: 5792153, 5794497
Fax: 5615024
Agricultural Machinery
Manufacturers Club
Federation of Thai Industries
394/14 Samsen Road
Bangkok 10300
Tel: 2800951
Fax: 2800959
Department of Agricultural Extension
Chatuchak, Bangkok 10900
Tel: 5793029, 5793013
Fax: 5793794
Regional Network of Agricultural Machinery
United Nations Economic and
Social Commission for Asia and the Pacific
U.N. Bldg
Rajdamnern Avenue, Bangkok 10200
Tel: 288-1569
Fax: 288-1068
Status of the Industry
Automotive manufacturers based in Thailand have been assembling cars, trucks and buses for the domestic market since the early 1960s. By the mid1970s, Thailand was home to more than a dozen auto plants producing a full range of vehicles. During the 1980s Thailand strengthened its component manufacturing base through application of a local content sourcing program.
Between 1988 and 1992, Thailand's automotive industry grew by an average of more than 25 percent per year. In 1993 sales amounted to a total volume of 456,461 units, or 26 percent growth over 1992.
Thailand's car market growth has proceeded despite the constraints of a highly regulated industry. Until 1991, Thailand carried some of the highest tariff and tax rates in the world for automobiles, banned imports of completely built up (CBU) vehicles and limited the scope of production at home.
Constraints on demand loosened considerably in July 1991, when the government slashed duties and excise taxes on both imported completely knocked down (CKD) and CBU vehicles. Moreover, officials lifted restrictions on local production and nudged local producers toward direct competition against imports.
In April, 1994 the Thai Board of Investment announced its new policy to begin granting promotion privileges to automakers producing for the export market. This move is expected to establish Thailand as the region's center for export production.
Activities of foreign companies
Growth has been fueled by strong local demand and high levels of foreign direct investments in the country's automotive production base. Japanese car companies, which accounted for nearly 95 percent of all sales in Thailand in 1992, are leading the way with plans to invest several hundred million dollars into the country in the 1990s.
Toyota marked its 30th anniversary of operations in Thailand in 1992 with the purchase of one million square meters of land in the Gateway Industrial Estate to the east of Bangkok. Valued at more than US$ 40 million, the site is destined to become a major pickup manufacturing plant. Hino Motor Sales (Thailand) Ltd. plans to invest in a second plant to boost its truck manufacturing capacity to two thousand units per month, up from a current level of 1,200. Mitsubishi's distributor in Thailand, MMC Sittipol, is launching a US$ 600 million investment campaign in 14 new parts production plants. When complete, MMC Sittipol will have one of the largest capacities of any manufacturer in Southeast Asia.
European and American companies are stepping up activities in Thailand too.
Chrysler Corporation has signed a joint venture agreement committing of US$ 8 million to begin assembling Jeep Cherokees in Thailand. Ford also signed an agreement with a local firm (Yontrakit Group) to assemble compact passenger cars in Thailand in 1994.
Lear Seating, a major seat supplier in North America, initiated a joint venture in 1991 to make leather seat covers for GM luxury sedans. Pacific Trim's plant is now fully operational and the company started exporting final OEM products to Detroit in early 1992.
In June 1992 the Thailand Board of Investment granted promotion to Dana Corporation's joint venture, Dana Asia Thailand. Dana will invest more than US$ 10 million to assemble prop shafts and axles for the local market.
Investment Opportunities
Thailand's economy and its automotive industry passed the takeoff stage of development in the late 1980s, recording the highest growth rates in Asia. Export growth shadowed local market expansion with shipment of component parts. International prospects for original and replacement equipment manufacturing are bright with a growing European market, developments in Eastern Europe and the reforms in Myanmar, Laos, and Vietnam.
Since the 1991 changes, Thaibased automotive firms have increasingly begun to target world standards for cost and quality. To reach these standards, local firms require assistance from technologyrich foreign firms.
These developments offer immediate opportunities to foreign firms seeking entry into Thailand's vehicle market whether producing parts and components for export markets or final products for local, regional, and international markets. As Thailand gears up to supply the emerging markets in Indochina, there is demand for foreign technology and management skills.
Contact persons/ addresses
AUTOMOTIVE DEVELOPMENT COMMITTEE
Ministry of Industry, Mrs. Orapin Werawut
Rama Vl Road
Bangkok 10400
Tel: 2464056
Fax: 2468826
AUTOMOTIVE INDUSTRY ASSOCIATION
Mr. Kavee Vasuvat, President
394/4 Samsen Road, Dusit, Bangkok 10300
Tel: 2118623
Fax: 280-0959
AUTO PARTS INDUSTRY CLUB
Mr. Khemadhat Sukhondhasingh, Director
394/4 Samsen Road, Dusit, Bangkok 10300
Tel: 2118623
Fax: 2800959
THAI AUTO PARTS MANUFACTURERS CLUB
Mr. Jittipong Sintupraserd, Manager
10/16 Soi Charansanitwong 13, Charansanitwong Road
Bangkok 10160
Tel: 4128326
Status of the Industry
The chemical process industry in Thailand, with more than 30 years of development, is one of the country's foundation industries. Its products find uses as raw materials in the chemical process industry itself. in other industries. and as final industrial and consumer items.
The major sectors of the industry are
1. Inorganic Chemicals Sub-Sector
The products of the inorganic chemical industry find uses in nearly all sectors of the chemical process industry. Its building blocks are naturally available resources, especially mineral resources.
Nitrogen
Ammonia is the most important nitrogenous chemical, both as a chemical and a source of nitrogenous fertilizer. There is no nitrogen production facility in Thailand and this is a key investment opportunity. Though a national fertilizer complex (the National Fertilizer Corporation) is planned, the project faces many difficulties and an uncertain future. There is another project still in the planning stages for a facility in the northeast that would produce fertilizer and chemicals.
Phosphorus
The phosphorus industry is closely linked to the fertilizer industry. One important phosphorus derivative, sodium tripolyphosphate (STPP), is used in the detergent industry. This compound, however, may have poor market growth because of its negative environmental effects.
Sodium/Chloralkali
The raw material in this industry is sodium chloride, which is obtained from rock salt or sea water. The investment opportunities in this sector are still not clear because of the industry's liberalization and the development of new technologies for smallscale local production. It should also be noted that STPP production faces additional challenges because of strong competition from zeolites as substitutes for detergent builder. Sodium sulfate consumption is also expected to decrease due to the introduction of compact detergents.
Potassium
A potash project is planned for the ASEAN region and should provide abundant raw material. Opportunities within local markets, however, are still small. The starting material for potassium compounds is natural deposit sylvite, which is treated to yield highgrade potassium chloride. In Thailand, sylvite is present in some areas, with extensive deposits of carnallite in the northwest.
2. Fertilizer Sub-Sector
With Thailand being one of the world's largest food producers and exporters, the fertilizer industry plays a vital role in national economic development. The viability of Thailand's national fertilizer complex depends on a number of factors including import duties and the participation of the government. Practically all fertilizer nutrients in Thailand are imported, either as finished or intermediate products that are compounded in local plants. Domestic production is now limited to granulation plants processing imported ingredients into NP or NPK fertilizers.
3. Petrochemicals Sub-Sector
The first petrochemical complex has been successful. Its core is the National Petrochemical Corporation, which produces ethylene and propylene from ethane, and propane supplied by the Petroleum Authority of Thailand. The second complex, which is just being implemented, will expand the industry to cover products from the BTX group (benzene, toluene, and xylene). This sector has been well structured for the commodity polymers. Opportunities in other smallervolume polymers, however, should be investigated.
4. Synthetic Fiber Sub-Sector
This sector is well established with plans to produce raw materials for manufacturing major synthetic fibers purified terephthalic acid and caprolactam for polyester and nylon, respectively. The industry is highly capital and technology intensive. The three main synthetic fibers produced in Thailand are rayon, polyester, and nylon.
5. Soap and Detergent Sub-Sector
This industry is undergoing changes because of environmental concerns and the introduction of compact detergents. The industry is dominated by three transnationals: Lever Brothers (Thailand), ColgatePalmolive (Thailand), and Lion (Thailand). As mentioned, zeolite is now replacing STPP as detergent builder. Sodium citrate, which is used in liquid detergents, can also be used as a cobuilder in laundry powder. It is expected that there will be a shift toward the use of nonionic surfactants. The use of additivies may increase and these include acrylate polymers and sodium perborate monohydrate. The introduction of compact detergents will reduce the consumption of sodium sulfate as a bulking agent.
6. Pesticides Sub-Sector
There have been a number of stumbling blocks to the development of the pesticide industry in Thailand. Many chemicals are used, the price range is limited, there are numerous government regulations, and chemicals may soon become obsolete. At the moment, only Paraquat is produced in Thailand. Nearly all pesticide producers are fomulators. In 1990, the industry imported products worth US$ 160 million.
Comparative advantage
The chemical process industry in Thailand has two key advantages: the country's population of just under 60 million means a goodsize domestic market, and its location in Southeast Asia suggests a potential distribution hub. Thailand also has significant natural resources such as natural gas, lignite, and other mineral resources that are already being used as raw materials in the industry.
Growth in this key industrial sector has been stunted for some years, but with the establishment of a petrochemical complex along Thailand's eastern seaboard, the situation is changing.
Some problems
This complex industry, with its numerous products and subsectors, poses several problems in terms of a development strategy. Highly capital and technology intensive, it is also highly polluting and must serve a complex array of subsectors and crosssubsector applications.
Status of the Industry
The electronics industry includes a wide range of different products, such as:
Thailand's electronics industry has made major strides in the past decade and can now produce many types of electronics equipment, subassemblies and components.
Among the leading industrial and professional electronics products are hard disk drives (HDDs) for computers, keyboards and telephones. At the end of 1992, Thaibased firms had a production capacity of more than one million HDDs, more than three million floppy disk drives, and well over 14 million telephones.
Thailand also has become a major manufacturing and assembly base for a number of electronic and related components, including integrated circuits (ICs), printed circuit boards (PCBs), miniature ball bearings, stepper motors, cathode ray tubes for color televisions, computer cords and cables. Manufacturers in Thailand can now produce more than 103 million PCBs and nearly twoandahalf million ICs each year.
Thailand's burgeoning telecommunications needs and the increasing role of private consortia in major telecommunications projects has greatly spurred the growth of Thaibased enterprises producing parts and components for telecom networks.
Export Market
The export value of Thaimade consumer electronic products such as televisions, video recorders and electric musical instruments went from US$ 12.6 million in 1980 to just under US$ 1.7 billion in 1992. The export value of computer periphals alone went from nil to US$ 2.2 billion during the same period. At the end of 1992 the total value of Thai electronics products was US$ 6.8 billion.
New firms such as Sharp, Sony, Mitsubishi and a large number of Japanese and Taiwanese enterprises recently entered the Thai market. They produce microwave ovens, video recorders and tapes, floppy disk drives, electronic watches, computer keyboards, and other parts and components, mainly for export.
Higher valueadded and higher technology products such as facsimiles and cellular telephones began to be produced. Firms that manufactured components for export gradually started supplying parts and components to be assembled into export products.
Additional major new investments included: a joint venture between the local Siam Cement Group and Mitsubishi to produce cathode ray tubes; PCB assembly by SCI Systems and Technology Applications; highend disk drive production by Micropolis; PCB production by Elec and Eltek of Hong Kong; television assembly by Thompson from France, Tatung from Taiwan, and Teletech from Hong Kong; precision computer parts operation by the Saha Union Group to supply IBM; semiconductor production by Toshiba Semiconductor and Oki; and camera production by Nikon.
Investment Opportunities
The Thailand Board of Investment has promoted more than 650 electronics firms, of which over 250 are now in operation. The electronics industry has played an increasingly important role in the manufacturing sector in general, and manufactured exports in particular .
The following areas are promising investment opportunities ins electronics industry for the next decade:
Technological Promotion Association
57 Sukhumvit Soi 29
Bangkok 10110
Tel: 2580320/24
Fax: 2586440
Thai Industrial Standards Institute
Ministry of Industry
Rama VI Road, Phyathai
Bangkok 10400
Tel: 2460037, 2461131
Fax: 2464085, 2483132
Thailand Insitute of Scientific and Technological Research
196 Paholyothin Road
Bangkok 10900
Tel: 5701121/30
Fax: 5614771
The Scientific and Technological Research Equipment Center
Chulalongkorn University
Chulalongkorn Soi 62
Phyathai Road
Bangkok 10500
Tel: 2514516, 2513927
Fax: 2154804
National Electronics and Computer Technology Center
Dr. Pairash Thajchayapong, Director
Rama VI Road, Phaya Thai
The Electronics Association of Thailand
Building 46, King Mongkut's Institute of Technology,Piboolsongkram Road
Bangkok 10800
Tel: 5858541 (ext. 2201, 2203)
Fax: 5874345
Thailand's Electrical Electronics & Allied Industries Club
The Federation of Thai Industries
394/14 Samsen Road
Bangkok 10300
Tel: 2800951
Fax: 2800958/9
The Telecommunication Association of Thailand
37/1 Limchareon 2 Bld. 2nd Floor
Viphavadee Rungsit Road
Bangkok 10400
Tel: 2797311/3, 2799285 (ext. 121)
Fax: 2783373
The Communcations Authority of Thailand
99 Chaengwattana Road
Bangkok 10002
Tel: 5730099
Fax: 5735468
Telephone Organization of Thailand
89/2 Chaengwattana Road
Bangkok 10210
Tel: 5051000
Fax: 5749541Bangkok 10400
Tel: 247-1482
Fax: 247-1335
Engineering Plastics and Synthetic Fibers
Status of the Industry
Given that the economy of Thailand has been expanding at an average of more than 8 percent a year for the past 20 years, the country's polymer industry has also seen accelerated growth.
Engineering plastics, with their superior properties, are finding increasing uses in applications demanding higher performance than commodity plastics. Engineering plastics include polyacetal, nylon, polycarbonate, and thermoplastic polyester molding compounds.
Now, only nylon is produced in Thailand, mainly for the synthetic fiber industry.
1. Engineering Plastics Sub-Sector
Thailand's first petrochemical complex was established during the 1980s. The result was accelerated development of the plastics processing industry. The local availability of raw materials played an important part in this expansion, as did the sharp rise in the domestic consumption of plastics.
Engineering plastics have seen excellent growth over the past few years. Polyacetal consumption in 1990 was 3,833 tons, an annual increase of 50 percent over each of the previous two years. Imported polyacetal was valued at US$ 9.3 million. Nylon imports of 5,621 tons in 1990 were valued at US$ 14.6 million. In the same year imports of polycarbonate resin grew by 23 percent and were valued at US$ 6 million. And polyethylene terephthalate (PET) shows promising growth because of a tremendous increase in bottling applications.
The Thai Board of Investment announced in April, 1994, that it will begin granting special investment incentives for the production of engineering plastics as part of its strategy to encourage growth in Thailand's supporting industries.
The main consumers of polyacetal resins are the electronics and electrical industries, accounting for 80 percent of the market. The electronics and electrical industries are also the major users of polycarbonate, consuming about 70 percent of production, with the remaining being used by the automotive and industrial parts industries. Polybutylene terephthalate (PBT) resins find nearly all applications in the electronics and electrical industries.
The opportunity for producing engineering plastics is in PBT, with an initial estimated capacity of 5,000 tons a year. Investment opportunities for engineering plastics include polyacetal, nylon, PET, and PBT.
Production of these compounds is promoted by the BOI. The growing demand for PBT at around 1,500 to 2,000 tons a year is a possible investment opportunity.
2. Synthetic Fiber Sub-Sector
The synthetic fiber industry, which is part of the chemical and natural fiber production industries, has been characterized by two phases.
During import substitution (196080), there was a high domestic demand for polyester, nylon, and acrylic. Since then, however, Thailand has been exparting an everlarger part of its synthetic fiber production. The value of exports went from US$ 560 million in 1983 to a staggering US$ 4.4 billion in 1992.
Major players
New major polyester fiber producers include Tuntex (Thailand), Siam Polyester, Sunflag Thailand, Torray Fibers (Thailand), Chiem Patana Synthetic Fiber, and Teijin (Thailand). New nylon fiber production facilities include Thai Taffeta and Thai Polymer Textile. End users of the synthetic fiber industry are either intermediate consumers in the production chain of the textile industry or industries that produce finished products. Almost all raw materials for producing synthetic fibers are imported.
The domestic production of raw materials used in synthetic fiber production such as ethylene glycol, terephthalic acid, and caprolactam, has been included in the national petrochemical complex plan.
The expansion of production facilities for the three main synthetic fibers (polyester, nylon, and acrylic) for domestic and export markets is being met by new investments in various stages of implementation. New investment opportunities will depend entirely on the export market and it is expected that foreign investment will play an important role in this development.
Opportunities for new fiber manufacturers are concentrated in special filament yarn and diversification of products. Improvement in efficiency, dyeing capability, and in the finishing sector would have a strong positive influence on the expansion of the Thai synthetic fiber industry.
Nylon Production
Nylon produced in Thailand is used mainly by the textile and fishing industries. Apart from that, it is also used by the automotive, electronic, and electrical industries.
Two key projects in this industry have been promoted by the Board of Investment (BOI), one for producing 10,000 tons of nylon a year and the other for 5,000 tons of polyacetal a year. Two other noteworthy projects have been approved by BOI for investment promotion, one for producing 16,000 tons of PET resins a year and the other for 21,000 tons a year.
Contact persons/ addresses
PLASTICS INDUSTRY CLUB
c/o Federation of Thai Industries
394/14 Samsen Road
Bangkok 10300
Tel: 2800951
Fax: 280-0959
Status of the Industry
Thailand is one of the world's largest producers and exporters of agricultural products. Traditionally, the country's agricultural output comprised mainly field crops that were semiprocessed and exported in bulk. During the past two decades, however, the agricultural sector has diversified into highervalue products such as horticulture, livestock, and aquaculture.
Some market segments such as dairy products and convenience foods are growing significantly faster than the industry as a whole, whereas the market for individual products such as canned pineapple and frozen poultry is approaching saturation levels.
Over the past two decades the food processing industry in Thailand has modernized. From relying on simple preservation techniques it has moved to using hightech machinery and largescale processing. As a result, Thailand has become a world leader in the export of a number of processed foods, including canned pineapple, frozen chicken, and canned and frozen seafood.
The food processing industry is adapting well to lifestyle changes among Thai consumers. There is a greater demand for food products that are more convenient to prepare, more nutritious, and of better quality. In this context, key growth products in the domestic market are fruit juices, canned fruits, coldcut meats and other precooked, readytoeat and readytoprepare meats, as well as the full range of dairy products, with the exception of condensed milk.
Excluding rice milling, there are more than 2,200 firms in the food processing industry registered with the Department of Industrial Works. The majority of them are small, with much of the industry's output accounted for by a few large companies. There are 4050 major fruit and vegetable processing enterprises, about 10 largescale meat processors, and 7 dairy processors.
Exports
The food processing industry in Thailand is now valued at more than US$ 4.6 billion a year. Food products account for US$ 2.8 billion and beverages for US$ 1.8 billion. Projections are that the industry will be valued at US$ 6.2 billion a year by 1996. A little more than half the food processing industry's output is exported.
Processed Fruit and Vegetable Output and Exports
(in thousand tons)
Year Fruit Fruit Vegetable Vegetable
production exports production exports
1988 683 478 225 135
1992* 1,003 702 418 251
1996** 1,314 920 568 341
Notes: * estimated, ** projected
Sources. Department of Agricultural Extension; Customs Department
The most important processed fruit is pineapple, which accounts for 93 percent of production. The main processed vegetables are baby corn, bamboo shoot, asparagus, mushrooms, and tomatoes.
Some problems
Though the food processing industry is growing at a robust pace, it faces a number of hurdles. Supplies of raw agricultural products are insufficient, unreliable, and sometimes of poor quality. For this reason, major processors are relying more on medium and largescale farmers. Other production constraints are the high cost of advanced processing technology and equipment, and lack of skilled staff to exercise quality control.
Investment Opportunities
Most of these, excluding dairy products, have good export potential. Other products with good export potential are frozen fruits and vegetables, and dried fruit. Key overseas markets, either emerging or already established, are North America, the European Union, Japan and other Asian countries, the Middle East and, in the longer run, Eastern Europe and South Africa.
More specific investment opportunities with good potential are:
Contact persons/ addresses
Federation of Thai Industries
394/14 Samsen Road
Bangkok 10300
Tel: 2800951
Fax: 2800959
Food Industries Club
15th floor, Maneeya Center
518/5 Ploenchit Road, Bangkok 10330
Tel: 2548178/81
Fax: 2548251
Department of Export Promotion
22/77 Rachadapisek Road, Bangkok 10900
Tel: 511 5066/77, 513 I 909/ 17
Fax: 5121079, 5131917
Thai Food Processor's Association
11th floor, Mahatun Plaza
888/114 Ploenchit Road, Bangkok 10330
Tel: 2536791/4
Fax: 2551479
Thai Fishery and Frozen Products Association
12 A floor, ITF Silom Palace Bldg
160/1947 Silom Road, Bangkok 10500
Tel: 2355225
Fax: 2355625
Thai Fruit and Vegetable Exporters Association
3 Soi Ajchara, Suthisan Road
Bangkok 10310
Tel: 2777124
Thai Broiler Processing Exporters Association
69/613 Suksawatdi Road
Bangkok 10140
Tel: 4635991/7
Fax: 4635751
Poultry Promotion Association of Thailand
c/o Department of Livestock Development
Phyathai Road
Bangkok 10400
Tel: 251 8205Metal Finishing
Status of the Industry
Metals play a crucial role throughout industry, from electronics and automotive to processed food and jewelry. For metals to be useful in manufacturing, they must be processed into appropriate shapes, textures, physical states, and chemical compositions.
Metal finishing is vital in nearly all industrial and manufacturing processes. Often, metals or metal components must be finished by some chemical or physical process so they will be suitable for specific applications. Such techniques as plating, heat treating, galvanizing, anodizing, chromating, and phosphating fall under the general heading of metal finishing.
Some companies find it costeffective to meet their metal finishing requirements with inhouse operations. Others prefer already finished products. There is a significant market need for service companies that can provide metal finishing facilities and fill the niche between the primary producers of metal ores and ingots and assemblers of finished products.
Until recently, much manufacturing in Thailand consisted of final product assembly. This meant heavy reliance on imported raw materials, components, and semifinished products. The trend now, however, is toward producing more components and materials within the country. This has required and fostered substantial growth among the socalled support industries that produce components and provide services to all major areas of industry.
Though some major companies are already engaged in these activities, there are few of them. Traditionally, finishing operations have been smallscale and fairly unsophisticated operations employing a limited number of people. As technologies advance and customer requirements become more sophisticated, there is an evergrowing demand for improved services in metal finishing, both in terms of better quality parts and materials and higher levels of production. Among the major industrial segments requiring finishing services are automobiles and transportation, steel, electronics, jewelry, and food processing.
Some Problems
Metal finishing processes often involve the use and discharge of toxic or corrosive chemicals. It is important to realize that adequate measures must be taken to ensure the health and safety of workers as well as the quality of discharged water and other wastes. The framework established by Thailand's New Factories Act provides guidelines for the control of industrial pollution and sets environmental standards.
Investment Opportunities
The government of Thailand and the Board of Investment (BOI) actively encourage and support investment in this area, and the economic, regulatory, and market outlook bodes well for investment in metal finishing industries. In April, 1994, the BOI announced it would be granting additional privileges to supporting industries as part of its strategy to build up this vital sector.
Forming a key link in the chain from raw materials to finished, valueadded products, metal finishing represents a significant opportunity for investors, entrepreneurs, and business people from nearly all sectors of industry.
Companies doing assembly and manufacturing in Thailand are anxious to integrate their processes backward and obtain as many components, parts, and raw materials as possible from Thai sources. Companies that can provide this type of support in metal finishing will find ample customers.
There is also much room for growth for companies that support metal finishing industries. Almost 100 percent of raw materials used in plating, for example, are imported. There are some 20 companies supplying chemicals, plating, heattreating equipment, and other technical services. More are needed as demand rises for metal finishing.
Firms can locate in government or privatelyrun industrial estates. These large and wellserviced areas provide centralized power, water, communications, waste treatment, and so on. Since one of the key factors in metal finishing services is rapid turn around, locating in or near an industrial estate has clear advantages as many potential customers will be on the same estate.
Contact persons/ addresses
MetalWorking and Machinery Industries Development Institute
Soi Trimit (Kluay Nam Thai)
Rama IV Road
Bangkok 10110
Tel: 3811051/6
Fax 3812565
Thai Electroplating Industry Forum
Soi Trimit, Rama IV Road
Bangkok 10110
Tel: 381-1051
Fax: 381-2565
Thai Foundrymen's Forum
Soi Trimit, Rama IV Road
Bangkok 10110
Tel: 381-1051
Fax: 381-2565
Thai Welding Society
c/o Dr. Siwa Bhongbhibhat
Siwa Testing Inspection & Consulting Co.,
17/1 St. Louis Soi 3
South Sathorn Road
Bangkok 10120
Tel: 2869402/4, 2132398
Fax: 2132399MetalWorking and Machine Tools
Status of the Industry
There are more than 30 highquality machine tool makers in Thailand manufacturing lathes, milling machines, presses, forges and heat treatment instruments. In addition, Thailand now houses more than one dozen superior metalworking firms, including Thai Engineering Products and Siam Nawaloha, both member companies of the Siam Cement Group.
In October 1990, Thailand slashed duties on machinery imports to five percent. This reform spurred a structural change in the local industry, forcing firms to find competitive niches in the market. Rather than competing directly against international industry giants, Thai firms are now working hard to cultivate a competitive advantage in smallscale flexible manufacturing.
The percentage of computer numerically controlled (CNC) machine tools will certainly grow as foreign investors in Thailand seek to make products that meet international standards for cost and quality. Already, thanks to marketing and distribution assistance from their parent companies, some firms are exporting part of their production.
Demand for metalworking and machine tool products is directly dependent on the success of a handful of down stream manufacturing and assembly industries, in particular the automotive, electronics and construction industries.
Since 1988 Thailand's auto industry has grown at more than 25 percent per year. Industry analysts anticipate annual growth to average 20 percent or better through 1995.
Electrical appliance and electronics manufacturers have also recorded strong expansion. The Thailand Board of Investment (BOI) has granted promotional status to over 300 new electronics investments in Thailand since 1989 and electronicsrelated items now account for almost 15 percent of total exports.
Additional growth sectors such as textiles and garments, footwear, jewelry and agroindustry also create signficant demands for specialized machinery and replacements parts, and service facilities for equipment and plants.
Investment Opportunities
Overall, Thailand's rapid industrialization and the high potential for the future signal a ready market opportunity for foreign metalworking and machinery firms seeking a profitable operating position in the country.
Thailand requires assistance in developing the following metalworking segments:
Investment Incentives
In the 1990s BOI will continue to provide investment incentives and service support to start up metalworking and machine tool operations. In 1993 casting, forging, and mold and die firms became eligible for increased promotion incentives because these industries encourage technical transfer. The BOI's BUILD program will assist firms in matching demand and supply and help small and mediumsize Thai metalworking firms achieve international standards
Engineering industries are a key target of the 7th National Plan and assured of firm government support.
The Metalworking and Machinery Industries Development Institute (MIDI), under the Ministry of Industry, also stands ready to support Thai firms producing engineering products by providing information, technical assistance, and training programs.
In a recent development, the Thai Board of Investment announced in April, 1994, that it will be granting increased privileges to activities such as metalworking which will encourage the growth of Thailand's supporting industries.
Contact persons/ addresses
Association of Thai Steel Industries
848/13 Rama 111 Road, Banklo, Yannawa, Bangkok 10120
Tel: 2920830
Fax: 2912888
Federation of Thai Industries
394/14 Samsen Road, Bangkok 10300
Tel: 2822482/3
Metal-Working and Machinery Industries Development Institute, Department of Industrial Promotion, Ministry of Industry
Soi Trimitr, Rama 4 Road, Bangkok 10110
Tel: 3811051/6
Fax: 3811812
Ministry of Industry
Rama Vl Road, Phyathai, Bangkok 10400
Tel: 2461137/43
Technological Promotion Association
57 Sukhumvit Soi 29, Bangkok 10110
Tel: 2580320/24
Fax: 2586440
Thai Industrial Standards Institute
Ministry of Industry
Rama Vl Road, Phyathai, Bangkok 10400
Telephone: 2460037, 2461131
Thai Tool and Die Industry Association
Soi Treemitr, Rama IV Road, Bangkok 1011
Tel: 3811051/6
Fax 3811812
Thai Foundrymen Forum
Soi Treemitr, Rama IV Road, Bangkok 1011
Tel: 3811051/6
Fax: 3811812
Telecommunications
Status of the Industry
There are two state enterprises, each managed by a separate board of directors, and one department within the Ministry of Transport and Communication (MOTC) that are responsible for telecommunications.
The Communications Authority of Thailand (CAT) controls mainly international telephone services and telegraph and postal services. The Telephone Authority of Thailand (TOT) is mainly responsible for conventional and public telephone services, whereas the Post and Telegraph Department (PTB) is responsible for managing the country's radio communications .
The mobile telephone network has been operated by the TOT since 1986 with the NMT 470 system providing nationwide service. The network consists of 5 mobile exchanges, 144 radio base stations, and 3,661 radio channels. In 1987, the Communications Authority of Thailand started providing cellular mobile phone service to 31 provinces using the AMPS 800A system. In 1990, CAT awarded Total Access Communication Co., Ltd. a concession to expand and operate AMPS 800 service (AMPS 800B).
Thailand is also moving to establish its own satellite communications network. In 1991, Shinnawat Satellite Co., Ltd. was awarded a 30year concession with an eight year exclusivity period to launch two satellites under buildtransferoperate (BTO) terms. One satellite was launched in December 1993, the other will be launched at the end of 1994. This national satellite project will create investment opportunities in related businesses.
Some problems
The telecommunications industry in Thailand, which is under the supervision of the Ministry of Transport and Communication has been hampered by the monopolistic policies of government enterprises. Another difficulty is that areas of supervision sometimes overlap. When technological advances create new services, the interpretation of the responsibilities of CAT, TOT, and the PTD are not always clear.
Competitive advantages
With projected private and publicsector investments of US$ 24 billion between 1992 and 2001, Thailand is likely to emerge as a major telecommunications player in Southeast Asia. Now, and for at least the next decade, Thailand will have a high demand for telecommunications services, equipment, and components.
Thailand is a convenient regional base for telecommunications projects. Neighboring countries such as Cambodia, Laos, and Vietnam are starting to improve their telecommunications infrastructure. The private sector participates in almost all these projects. Foreign and Thai companies are investing in the region's telecommunications industry.
Investment Opportunities
The Thai telecommunications industry has a large growth potential. There is not only a strong demand for existing services but also for an array of new services as Thailand commits itself to meet international competition head on. To keep pace with and help sustain its economic expansion, Thailand needs 600,000 new telephone lines each year. In Bangkok alone, more than one million customers are waiting for telephone lines.This situation explains the popularity of cellular phones.
The Office of the Board of Investment (BOI) is actively promoting a parts and components networking facility.
The 7th National Social and Economic Development Plan (19921996) recommends that laws be amended to facilitate a greater role for joint private/public sector ventures, especially for the private sector to operate selective support services.
Demand will be particularly high for:
Future Outlook
The MCOT plans on ending the monopoly of state enterprises.After 1996, private firms are expected to be allowed to operate additional communications services (all valueadded, such as paging and mobile phones, but not ordinary voice phones) without being under TOT or CAT concessions. And after 2001, private firms may be allowed to operate all basic telecommunications services.
The TOT and CAT plan on investing nearly US$ 1 billion and the private sector around US$ 7 billion from 19921996.
Major projects include:
Contact persons/ addresses
Communications Authority of Thailand
99 Chaeng Wattana Road
Bangkok 10002
Tel: 5730099
Fax: 5735468
Post and Telegraph Dapartment
Paholyothin Road, Soi 8 (Sailom)
Bangkok 10400
Tel: 2713508
Fax: 271-3516
Telecommunication Authority of Thailand
2nd fl, 37/1 Lim Chareon Bldg
Vipavadee Rangsit Road
Bangkok 10400
Tel: 2797311/3
Fax: 2783373
Telephone Organization of Thailand
89/2 Chaeng Wattana Road
Bangkok 10210
Tel: 5051000, Fax: 5749541